DePauw University

Overview

Deal Type Debt Capital Markets
Size $126.9 Million
Educational Facilities Revenue Bonds
Client & Transactional Partners DePauw University
Our Role Sole Manager

Summary

KeyBanc Capital Markets (KBCM) served as served as Sole Manager for $118.1 million of Tax-Exempt Educational Facilities Revenue Bonds, Series 2022A (the "2022A Bonds") and $8.8 million of Federally Taxable Educational Facilities Revenue Bonds (the "2022B Bonds", collectively with the 2022A Bonds, the "2022 Bonds"), on behalf of DePauw University (the University). The 2022 Bonds were issued for the purposes of the current refunding of multiple variable rate demand and bank direct purchase bonds issued through the Indiana Finance Authority, including (a) Series 2008A; (b) Series 2014; (c) Series 2015; and (d) Series 2018; (ii) the payment in full of all swap termination fees associated with interest rate swap agreements incurred in 2002, 2006, and 2018; and (iii) the payment of certain costs associated with the issuance of the Series 2022 Bonds.

Following a period of operating pressures exacerbated by the COVID-19 pandemic, the University elected to restructure its debt portfolio with a fixed rate, overall level debt service structure. The restructuring will provide the University with budget certainty and cash flow relief for operations as it embarks on a new strategic plan and capital campaign. Via the refinancing, the University eliminated covenants, renewal, acceleration, and interest rate risks inherent to the direct purchase and variable rate structures. Additionally, by terminating the swaps, the University de-risked its debt portfolio further by eliminating counterparty, basis, and LIBOR transition risks.

Despite challenging market conditions brought about by municipal bond fund outflows, inflationary pressures and interest rate volatility, the University’s transaction successfully priced with the University achieving 30-year fixed rate committed funding in advance of a broad sell-off in both equity and fixed income markets.

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